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The use of consumer data to drive marketing has contributed $202 billion in revenue to the U.S. economy, according to a study commissioned by the Direct Marketing Association.

Bloomberg BNA's Alexis Kramer posed questions to Thomas J. Benton, CEO of the DMA, on the growth of data-driven marketing, the main legal issues arising from it and the benefits of industry self-regulation.

Bloomberg BNA:

As the digital advertising market has exploded, has the DMA seen a change in the kinds of companies that it represents?

Thomas J. Benton:

Yes, very much so. DMA will celebrate its centennial next year and our membership today looks much different than it did in 1917. A key contributor to this change is the vast increase in data that’s available to marketers today as well as the innovations in marketing that technology is driving.

With a focus on data and marketing, DMA has a broad purview. Our membership is comprised of both supply-side and demand-side organizations, as well as organizations in every stage of development and size. Additionally 501(c)(3) fundraisers make up a significant portion of the DMA membership. And yet, despite all the change that the digital era and technology have ushered in, DMA and our members still operate on similar principles and with an enduring commitment to build lasting relationships based on trust that guided our first members 99 years ago. DMA’s members still strive to truthfully deliver the best product or service to customers at the right place and time, and to do this in a cost-effective manner.

It’s all about relationships, and being part of DMA enables our solution provider members to build relationships with our brand-side marketer members that then efficiently enable them to identify and build relationships with individual consumers. And since DMA members abide by DMA’s Guidelines for Ethical Business Practice, which ensure consumer trust and transparency across the marketing industry, they know that they can trust one another. This gives them a competitive advantage as they continue to both drive and adapt to the ever-increasing pace of innovative and disruptive changes and responsibly use the immense amount of data at their fingertips.

Bloomberg BNA:

What are the main legal issues arising from data-driven marketing?

Benton:

The gathering and use of data is at the top of the list. Responsible marketers rely on consumer trust. If marketers violate that trust, then they hurt not only their organization but the entire industry. So marketers have it in their best interests to ensure customer privacy, and they strive to protect sensitive, personal information.

Businesses run into challenges, however, when lawmakers at the state and federal level execute requirements without considering practical ramifications. For instance, 47 U.S. states have laws on the books pertaining to data breach notifications and the specific steps companies must take in the event of a data breach. If an organization that has customers across the country suffers a data breach, then it suddenly must navigate a complex patchwork of state laws, all while investigating and eliminating the breach. We think that can be simplified with a single, national standard data breach protocol.

“Our government legislative bodies are not positioned to keep up with the marketing industry’s accelerating pace of change.”

Bloomberg BNA:

How can a balance be achieved between innovation in the marketing industry and government regulation?

Benton:

That is an incredibly relevant and timely question, particularly since the data and marketing industries are driving positive growth in the U.S. economy. DMA just published our 2015 Value of Data study, independently conducted by professors from Harvard Business School and Columbia University. Our research showed that the data-driven marketing economy fueled 966,000 jobs and $202 billion in revenue for the economy in 2014. (The DDME is defined as the ecosystem of supplier firms that help organizations and marketers use individual-level customer data to support marketers as they “go to market,” designing and implementing strategies to generate, fulfill and grow demand for their goods and services.)

Compared to the 2012 data, these gains are remarkable—a 49 percent growth in jobs and a 35 percent growth in revenue. Comparatively speaking, the U.S. economy grew at less than 3 percent in the same two years. These findings demonstrate the invaluable nature of data in today’s rising Internet of Things economy, and equip policymakers for fact-based versus fear-based conversations about the data-driven marketing economy.

It’s clear to DMA that there are places where government regulation is warranted, and that’s why DMA has supported and continues to assist in enforcement of a number of sectoral laws protecting sensitive information. These include, among others, the Fair Credit Reporting Act (FCRA), the Health Insurance Portability and Accountability Act (HIPAA) and the Children's Online Privacy Protection Act (COPPA). These laws ensure that the most personal consumer information is used responsibly, while industry self-regulation (administered under the DMA Ethical Guidelines I referenced earlier) addresses practices within the industry.

For more than 60 years, DMA has led a robust self-regulatory program that is constantly enforced and continually updated. This is very important as, frankly, our government legislative bodies are not positioned to keep up with the marketing industry’s accelerating pace of change. Since DMA members are initiating those innovative and disruptive changes, DMA is in a much better position to nimbly keep pace.

Moreover, because DMA is uniquely positioned among trade associations in that we represent the entire ecosystem of our industry, we have a much broader purview than the other associations in martech and adtech. This comprehensive perspective enables DMA to lead the entire marketing industry’s self-regulation arm. In addition, DMA also maintains a Consumer Preference Service which enables individual consumers to limit and filter the offers that they receive from our membership organizations. In short, DMA delivers the informed, nimble approach needed for industry self-regulation and consumer choice in marketing that provides consumers with choice and protection and allows innovation that benefits consumers and society.

Bloomberg BNA:

What are some best practices for business self-regulation?

Benton:

DMA’s ethical standards and guidelines are applied industry-wide and are driven by both consumer and company inquiries. Additionally DMA offers a robust curriculum of educational courses that teach effective and responsible data and marketing practices. DMA’s self-regulatory program and its educational offerings are crafted in partnership with our member organizations that understand the importance of acting responsibly to build trust with their customers.

During the past five years alone, DMA processed over 45,000 consumer complaints that included assisting and educating consumers, informing marketers about DMA requirements, and pursuing bad actors within our industry. In some instances, DMA has removed companies from our membership roster and reported them to law enforcement. In most cases, however, investigations result in minor course corrections by responsible marketers that are often not aware that they are out of compliance.

Bloomberg BNA:

What are your upcoming initiatives to further self-regulation?

Benton:

Working closely with key DMA members, we’re taking big steps right now to update our data guidelines within DMA’s self-regulatory principles to reflect what’s currently going on in the marketplace in terms of technological advancements and innovative uses of data. This latest revision of DMA’s data standards is tackling several new high profile self-regulation issues, including: (1) “on-boarding”
of offline data online; (2) use of television viewing data; and (3)
information service provider transparency.

We know that change is constant, and that there are always new questions arising that need to be answered in this rapidly-changing technological landscape. This is why we advocate for industry self-regulation over slow-moving government regulation, as we can get the smartest people in a room and move much quicker than statehouses or Congress, which can end up passing laws that are out-of-date before they even go into effect.

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